Ryanair and IAG lead fresh fall in European airline shares

Ryanair shares are down more than 7% over the past 12 months, with IAG down by over 66%
Ryanair and IAG lead fresh fall in European airline shares

Ryanair shares have taken a hit from Covid wiping out air travel.

Aer Lingus owner IAG and Ryanair led a fresh slump in airline stocks, with share prices falling further on increased Covid infection rates and fears that new variants of the virus will further restrict travel throughout the EU.

IAG – which also owns British Airways and Spain’s Iberia, Vueling and Air Europa – sank by as much as 8%; while Ryanair bottomed out at nearly 6%. There were also heavy share price falls for Lufthansa and EasyJet, which tumbled by around 8%.

Ryanair shares are down more than 7% over the past 12 months, with IAG down by over 66%.

Europe’s main carriers saw hefty losses on Friday after EU countries agreed to keep borders open but to heavily restrict non-essential travel. 

However, some leaders are calling for borders to be closed to all but essential internal EU movement – something German Chancellor Angela Merkel called “a last resort” last week.

Here, Transport Minister Eamon Ryan warned of a tougher and stricter and “more wary” stance over travel to be taken by Ireland, with the Government set to “tighten up” on inbound and outbound flights.

David Nabarro – the World Health Organisation’s special envoy on Covid – said Ireland’s recent Covid reduction rate could be at risk if a lot of infected people were to enter the country.

Further consolidation

PwC said  last week the airline industry would likely see further consolidation this year as pressures persist. 

In a report on the state of the aviation sector, it said airlines would need ongoing access to emergency liquidity – including government support – and many carriers will need to rethink their finances, fleet sizes and overall business models in order to simply survive.

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It said for most airlines a return to business as usual is not going to be a viable option, due to rising debt levels and pre-pandemic passenger numbers unlikely to return for some time.

There will be more airline casualties, it warned, while for those that do survive their ability to thrive will be more challenging.

Lufthansa chief executive Carsten Spohr last week said the German airline giant was effectively losing €1m every two hours due to the Covid impact on operations.

Vaccines and improved testing

In a research note on the industry, Davy said vaccines and improved testing still hold out some hope for business in the summer. Over the medium-to-longer term, European recovery will be led by low-cost operators, with Ryanair and EasyJet leading the way.

The likes of Air France-KLM and Lufthansa have the most work to do in order to restructure their businesses, it said.

However, Davy said IAG's recovery also could be more prolonged given its heavy reliance on long-haul routes.

Airline representative group the International Air Transport Association – IATA – has predicted the industry will have ended up losing $118.5bn (€98bn) in 2020 and will lose a further $38.7bn this year.

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